Same Space Average Rent on Executed Leases Increased 23.2% in Office Properties and 19.9% in Industrial/R&D Properties
MELVILLE, N.Y.--(BUSINESS WIRE)--Aug. 7, 2001--
Reckson Associates Realty Corp. (NYSE:RA) today reported second
quarter diluted Funds from Operations ("FFO") of $.70 per share, as
compared to FFO of $.65 per share for the second quarter of 2000,
representing a per share increase of 7.7% FFO for the second quarter 2001 includes a $3.5 million or $.04
per share charge to reserve against interest income accrued for the
quarter on the Company's two loans to Frontline Capital Group. Reckson
also reported diluted FFO for the six months ended June 30, 2001 of
$1.38 per share, as compared to FFO of $1.27 per share for the six
months ended June 30, 2000, representing a per share increase of 8.7%.
Commenting on the second quarter results, Scott Rechler, Reckson's
Co-Chief Executive Officer, stated, "Our performance reflects the
strength of our portfolio and the ability of our team to continue to
produce in a challenging economic environment."
Portfolio performance remained strong during the second quarter
with occupancies of 97.0% for the office portfolio and 97.9% for the
industrial portfolio as of June 30, 2001. Operating margins increased
to 67.4% in the second quarter 2001, as compared to 66.5% in the
second quarter 2000.
Same property net operating income for the second quarter 2001
increased 9.6% on a GAAP basis and 8.5% on a cash basis compared to
the second quarter of 2000. Occupancy on the same property portfolio
increased 90 basis points from 96.7% at June 30, 2000 to 97.6% at June
30, 2001.
Rents on same space leases executed during the second quarter 2001
increased 23.2% (GAAP) and 13.7% (cash) in the Office properties and 19.9% (GAAP) and 7.0% (cash) in the Industrial/R&D properties.
At June 30, 2001, Reckson had two outstanding loans to FrontLine
Capital Group of $93.4 million and $49.3 million. Interest accrued on
these loans for the second quarter aggregated approximately $5.0
million. The Company has taken a reserve against interest income
accrued for the second quarter on the FrontLine loans in the amount of
$3.5 million, or $.04 per share, based on its assessment of the
amounts expected to be received on these loans. Based on current
conditions, the Company expects to record a similar reserve in future
quarters. In addition, the Company has formed a committee of
independent members of the Board of Directors to evaluate, consider
actions and make recommendations with respect to the FrontLine Capital
Group loans.
The Company also reported second quarter diluted Earnings Per
Share ("EPS") of $.32 per Class A common share, as compared to EPS of
$.40 per Class A common share for the second quarter of 2000. The
decrease is attributable to a $6.7 million gain on sale of real estate
assets in the second quarter 2000 with no asset sales in the second
quarter of 2001. Adjusting for the gain on sale of real estate assets,
diluted EPS for the second quarter 2000 was $.30 per Class A common
share as compared to $.32 per Class A common share for the second
quarter 2001, representing an increase of 6.7%.
Other highlights include:
-
Completed a $250 million ten year mortgage financing on 919
Third Avenue with an interest rate of 6.867% per annum.
-
Completed a $75 million five year mortgage financing on 1350
Avenue of the Americas with an interest rate of 6.52% per
annum.
-
Continued leasing momentum at Reckson Executive Park in
Melville, the Company's newly developed Class A office
building, with leased space now totaling 86,762 square feet,
representing 31% of the total rentable space.
-
Completed dispositions of three non-core office assets
totaling approximately $32 million and entered into contracts
to sell three additional non-core office assets totaling
approximately $53 million as part of the Company's capital
recycling program.
-
Entered into a letter of intent to sell a 49% interest in 919
Third Avenue to a domestic institutional pension fund.
-
Moody's Investor Service reaffirmed the investment grade
rating of Baa3 on the Company's senior unsecured debt and
maintained a stable rating outlook opinion.
-
Increased the dividend on the Company's Class A common stock
by 10% and increased the dividend on the Company's Class B
common stock by 8.2%.
On Wednesday, August 8th, Reckson Associates' management will
discuss FFO guidance for 2001 and 2002 on the Company's quarterly
earnings conference call. Based on management's view of current market
conditions and assumptions with regard to rental rates, space
absorption and other market factors, and the impact of the Company's
decision to reserve against interest income on the loans to Frontline
Capital Group, a range of diluted FFO per share of $2.72 to $2.74 for
2001 and $2.85 to $2.89 for 2002 will be discussed.
Estimates of future FFO per share and certain other matters
discussed herein are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Although we
believe the expectations reflected in such forward-looking statements
are based on reasonable assumptions, forward-looking statements are
not guarantees of results and no assurance can be given that the
expected results will be delivered. Such forward-looking statements
are subject to certain risks, trends and uncertainties that could
cause actual results to differ materially from those expected. Among
those risks, trends and uncertainties are the general economic
climate, including the conditions affecting industries in which our
principal tenants compete; changes in the supply of and demand for
office and industrial properties in the New York Tri-State area;
changes in interest rate levels; downturns in rental rate levels in
our markets and our ability to lease or release space in a timely
manner at current or anticipated rental rate levels; the availability
of financing to us or our tenants; changes in operating costs,
including utility costs; repayment of debt owed to the Company by
third parties (including FrontLine Capital Group); risks associated
with joint ventures; and other risks associated with the development
and acquisition of properties, including risks that development may
not be completed on schedule, that the tenants will not take occupancy
or pay rent, or that development or operating costs may be greater
than anticipated. For further information on factors that could impact
us, reference is made to our filings with the Securities and Exchange
Commission. We are subject to the reporting requirements of the
Securities and Exchange Commission and undertake no responsibility to
update or supplement information contained in this press release that
subsequently becomes untrue.
Reckson Associates Realty Corp. is a self-administered and
self-managed real estate investment trust (REIT) specializing in the
acquisition, leasing, financing, management and development of office
and industrial properties.
Reckson's core growth strategy is focused on the markets
surrounding and including New York City. The Company is one of the
largest publicly traded owners, managers and developers of Class A
office and industrial properties in the New York Tri-State area, with
185 properties comprised of approximately 21 million square feet
either owned and controlled, directly or indirectly, or under
contract. For additional information on Reckson Associates Realty
Corp., please visit the Company's web site at www.reckson.com.
CONFERENCE CALL AND WEBCAST
The Company's executive management team led by Co-Chief Executive
Officer Scott Rechler, will host a conference call outlining second
quarter results on Wednesday, August 8, 2001 at 3:00 p.m. EST. The
conference call can be accessed by dialing (800) 288-8976
(internationally (612) 332-0720). No passcode is required. The live
conference call in a listen-only mode will also be available through
the Company's web site at www.reckson.com in the Investor Relations
section with an accompanying slide show presentation outlining the
Company's second quarter results.
A replay of the conference call will be available telephonically
from August 8, 2001 at 7:00 p.m. EST through August 17, 2001 at 11:59
p.m. EST. The telephone number for the replay is (800) 475-6701,
passcode 594650. A replay of the conference call via the Company's web
site will also be available through August 17, 2001 at 11:59 p.m. EST.
FINANCIAL STATEMENTS ATTACHED
A copy of the supplemental materials on the Company's second
quarter results is available by calling or written request to Susan
McGuire at Reckson Associates Realty Corp., 225 Broadhollow Road,
Melville, New York 11747-4883, telephone number (631) 622-6746.
Reckson Associates Realty Corp. (NYSE:RA)
Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Property Operating
Revenues:
Base rents $ 111,184 $ 96,099 $ 218,678 $ 190,499
Tenant escalations
and reimbursements 14,165 12,984 30,110 25,830
Total property
operating revenues 125,349 109,083 248,788 216,329
Property Operating
Expenses:
Operating expenses 23,453 20,634 47,223 42,574
Real estate taxes 17,421 15,874 34,645 32,223
Total property
operating expenses 40,874 36,508 81,868 74,797
Net Operating Income 84,475 72,575 166,920 141,532
Gross Margin percentage 67.39% 66.53% 67.09% 65.42%
Other Income 7,038 16,372 14,485 26,784
Other Expenses:
Interest expense 23,562 24,176 47,193 48,016
Marketing, general
and administrative 8,411 6,509 15,908 12,947
Depreciation and
amortization 27,172 22,426 50,693 43,437
Total other expenses 59,145 53,111 113,794 104,400
Minority partners'
interests in consolidated
partnerships 4,065 1,925 9,820 3,899
Income before limited
partners' minority
interest in the operating
partnership,
distributions to
preferred unit holders
and dividends to
preferred shareholders 28,303 33,911 57,791 60,017
Less:
Limited partners'
minority
interest
in the operating
partnership 2,616 3,083 5,331 5,361
Preferred unit
distributions
and preferred
dividends 5,928 7,857 12,013 15,842
Net income available
to common
shareholders $ 19,759 $ 22,971 $ 40,447 $ 38,814
Net Income available to:
Class A common
shareholders $ 15,109 $ 16,655 $ 30,417 $ 28,101
Class B common
shareholders 4,650 6,316 10,030 10,713
Total net income $ 19,759 $ 22,971 $ 40,447 $ 38,814
Basic weighted average
common shares
outstanding:
Class A common
shareholders 47,221,917 41,343,118 46,357,533 40,862,650
Class B common
shareholders 10,283,513 10,283,513 10,283,513 10,283,556
Basic net income per
weighted average
common share:
Class A common
shareholders $ .32 $ .40 $ .66 $ .69
Class B common
shareholders $ .45 $ .61 $ .98 $ 1.04
Diluted weighted average
common shares
outstanding:
Class A common
shareholders 47,600,390 41,700,478 46,779,905 41,204,762
Class B common
shareholders 10,283,513 10,283,513 10,283,513 10,283,556
Diluted net income per
weighted average
common share:
Class A common
shareholders $ .32 $ .40 $ .65 $ .68
Class B common
shareholders $ .34 $ .44 $ .71 $ .75
Selected Balance Sheet Data (in thousands) June 30,
2001 2000
Commercial real estate investments,
at cost, before depreciation $ 2,860,491 $ 2,362,269
Total assets $ 3,112,242 $ 2,884,667
Mortgage notes payable $ 730,170 $ 527,466
Unsecured credit facility and term loan $ 334,600 $ 448,600
Senior unsecured notes $ 449,424 $ 449,348
Total liabilities $ 1,639,095 $ 1,544,277
Stockholders' equity $ 1,190,951 $ 1,108,497
Total debt to total market capitalization 44.3% 42.3%
Reckson Associates Realty Corp. (NYSE:RA)
Funds From Operations
(in thousands, except per share amounts)
Three Months Six Months
Ended Ended
June 30, June 30,
2001 2000 2001 2000
Net income available
to common
shareholders $ 19,759 $ 22,971 $ 40,447 $ 38,814
Adjustments for basic
funds from operations:
Add:
Limited partners'
minority interest in
the operating
partnership 2,616 3,083 5,331 5,361
Real estate
depreciation
and amortization 26,727 21,937 49,715 42,552
Minority partners'
interests in
consolidated
partnerships 4,065 1,925 9,820 3,899
Less:
Gain on sales of real
estate --- 6,662 --- 6,662
Amounts distributable to
minority partners
in consolidated
partnerships 5,104 2,136 10,805 4,517
Basic Funds From Operations
("FFO") $ 48,063 $ 41,118 $ 94,508 $ 79,447
Add:
Dividends and
distributions
on dilutive
shares and units 6,958 9,451 14,637 19,029
Diluted FFO $ 55,021 $ 50,569 $109,145 $ 98,476
Basic FFO calculations:
Weighted average
common shares
outstanding 57,505 51,627 56,641 51,146
Weighted average units
of limited partnership
interest outstanding 7,763 7,695 7,728 7,697
Basic weighted
average common shares
and units outstanding 65,268 59,322 64,369 58,843
Basic FFO per weighted
average common
share or unit. $ .74 $ .69 $ 1.47 $ 1.35
Basic weighted average
dividends or distributions
per share or unit $ .46 $ .42 $ .88 $ .83
Basic FFO payout ratio 62.1% 60.8% 59.8% 61.2%
Diluted FFO calculations:
Basic weighted average common
shares and units
outstanding 65,268 59,322 64,369 58,843
Adjustments for dilutive FFO
weighted average shares
and units outstanding:
Add:
Weighted average common
stock equivalents 378 357 422 342
Weighted average shares
of Series A Preferred
Stock 8,060 8,060 8,060 8,060
Weighted average shares
of Series B Preferred
Stock 1,919 5,294 1,919 5,526
Weighted average shares
of minority partners'
preferred interest 2,277 3,454 2,862 3,454
Weighted average units
of preferred limited
partnership interest 1,127 1,367 1,246 1,367
Dilutive FFO weighted
average shares and
units outstanding 79,029 77,854 78,878 77,592
Diluted FFO per weighted
average share
or unit $ .70 $ .65 $ 1.38 $ 1.27
Diluted weighted average
dividends or distributions
per share or unit $ .45 $ .41 $ .87 $ .81
Diluted FFO payout
ratio 64.9% 63.6% 62.6% 63.8%
Reckson Associates Realty Corp. (NYSE:RA)
Cash Available for Distribution
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Basic Funds From Operations $48,063 $41,118 $94,508 $79,447
Adjustments for basic cash
available for distribution:
Less:
Straight line rents (Note a) 10,854 8,300 22,013 12,838
Non-incremental capitalized
tenant improvements and
leasing commissions 4,098 1,873 6,744 4,743
Non-incremental capitalized
improvements 1,629 1,446 2,264 2,697
Basic Cash Available for
Distribution ("CAD") 31,482 29,499 63,487 59,169
Add:
Dividends and distributions
on dilutive shares and
units 1,491 9,451 3,745 19,029
Diluted CAD $32,973 $38,950 $67,232 $78,198
Basic CAD calculations:
Weighted average common shares
outstanding 57,505 51,627 56,641 51,146
Weighted average units of
limited partnership interest
outstanding 7,763 7,695 7,728 7,697
Basic weighted average common
shares and units
outstanding 65,268 59,322 64,369 58,843
Basic CAD per weighted
average common share
or unit $.48 $.50 $.99 $1.01
Basic weighted average
dividends or distributions
per share or unit $.46 $.42 $.88 $.83
Basic CAD payout ratio 94.8% 84.7% 89.0% 82.1%
Diluted CAD calculations:
Basic weighted average common
shares and units
outstanding 65,268 59,322 64,369 58,843
Adjustments for dilutive CAD
weighted average shares and units
outstanding:
Add:
Weighted average common
stock equivalents 378 357 422 342
Weighted average shares
of Series A Preferred Stock --- 8,060 --- 8,060
Weighted average shares of
Series B Preferred Stock --- 5,294 --- 5,526
Weighted average shares of
minority partners' preferred
interest 2,277 3,454 2,862 3,454
Weighted average units of
preferred limited partnership
interest 1,127 1,367 1,246 1,367
Dilutive CAD weighted average
shares and units
outstanding 69,050 77,854 68,899 77,592
Diluted CAD per weighted
average share or unit $.48 $.50 $.98 $1.01
Diluted weighted average
dividends or distributions
per share or unit $.46 $.41 $.87 $.81
Diluted CAD payout ratio 95.4% 82.5% 89.5% 80.3%
Notes:
(a) Includes straight line rental income attributable to the property
located at 919 Third Avenue, New York, N. Y. of $6,880, $4,309,
$14,384 and $5,384, respectively.
CONTACT:
Reckson Associates Realty Corp.
Scott Rechler, Co-CEO
Michael Maturo, CFO
631/694-6900 (Phone)
631/622-6790 (Facsimile)
